by Jon Salvadori

Created on: May 13, 2007   Last Updated: May 14, 2007

Investing for income is NOT what your typical stockbroker knows how to do! Investing for income is a way to take your future into your own hands, not depend on the whims of the market and the possibilities of government or pension failure. Do you have friends or family who lost everything in the tech crash? To Enron? To similar stock market fakery-failures? To get-rich-quick schemes? To buying a bad house in a boom market, only to lose everything when the market ticked south?

The scenarios mentioned above all have one thing in common - the investment was for GROWTH, not INCOME. The idea when buying a stock like Enron at 25$/share, then selling it at 200$/share is that all your money is made at the END of the transaction - and if you're not among the lucky few that got to sell at 200$/share, then you can and will lose not only your profit, but your capital as well. The same situation applies to those who "flip" houses for a quick profit - when the market is rising steadily, flipping can net a solid, even phenomenal income! However, many people have their investment lives so leveraged that even "failure to grow" (not necessarily even "lower market prices") can cause the whole business to collapse on itself.

Investing for income is a different paradigm - investing for income is a way to ensure that your investments put money in your pocket on a periodic basis. In fact, that is Rule Zero of income investing - if an investment does not generate cash flow, it is not an income investment. Stocks which provide a quarterly dividend are an example of income investments, as are bonds which pay interest periodically. Rental property is the other type of income investment that anyone can participate in - other, more involved types of income investing sometimes require special skills, fame, or both.

Dividend paying stocks are the low-budget investor's dream, because they require the least amount of money up front. Often, all you need to have to buy a share of investment stock is the price of one share! In fact, some companies have programs called DRIPS (Dividend Re-Investment Programs) which allow you to buy fractional shares of the company. Imagine being able to buy 50$ of your favorite stock every 3 months, no matter what the share price is! If the stock is selling for 25$/share, you are buying 2 shares per quarter, while if it is selling for 150$/share, you're only buying 1/3rd of a share. The dividends from a DRIP program are re-invested in shares of the company stock -

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